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Boeing, Embraer near deal on commercial air business: source

Posted Feb 6, 2018 by AFP
US aerospace giant Boeing and Brazil's Embraer are close to an agreement to combine their commercial air operations into a new company, a person familiar with the talks told AFP Tuesday.
Boeing factory in Everett Washington state.
Boeing factory in Everett Washington state.
Jeremy Elson

US aerospace giant Boeing and Brazil's Embraer are close to an agreement to combine their commercial air operations into a new company, a person familiar with the talks told AFP Tuesday.

Boeing would hold 80 to 90 percent of the new company, which would be based in Chicago.

Embraer's military operations would not be affected by the transaction and would remain under Brazilian control, the source said.

That structure could address the main roadblock to the deal between the two aerospace companies: Brazilian government opposition.

The companies in December confirmed they were in talks on a possible combination, a move that was seen as part of Boeing's strategy to counter archrival Airbus' ambitions in the smaller commercial aircraft category with a venture with Canadian company Bombardier.

However, the talk of a deal drew immediate objections from the government in Brazil, which holds a so-called golden share with veto power over Embraer transactions.

Brazil's defense ministry has referred to that control of Embraer as "a matter of national sovereignty." According to the report in Brazilian daily Valor Economico, the government would retain the "golden share" in Embraer.

Boeing chief Dennis Muilenburg told investors last week that the combination with Embraer would be "a great strategic fit."

"These discussions are productive and we're continuing to have active dialogue with the key stakeholders," Muilenburg said.